Korean labour laws do not distinguish blue-collar workers from white-collar workers, and these terms are merely used to describe employees doing different categories of work. Hence, both blue-collar workers and white-collar workers fall under “employees” defined under the Labor Standards Act, and are subject to identical treatment under other labour-related laws. The Labor Standards Act defines “employees” as persons who provide labour to businesses or at workplaces for the purpose of earning wages, irrespective of job types.

Meanwhile, forms of employment can be largely categorised into two types:

• direct employment by the employer; and
• indirect employment of another employer’s employee.

These forms may be further narrowed down based on the employee’s employment contract period and roles. 

There are no differences in status between employees across the job types. All types of workers are considered to be employees under the Labor Standards Act, and all labour-related laws apply equally to both types of workers.

Among various types of employment contracts, the two major types are “employment contracts without a fixed term” (ie, indefinite employment contracts) and “employment contracts with a fixed term” (ie, definite employment contracts). The Labor Standards Act does not have provisions that separately govern the duration of employment contracts. Therefore, employers and employees may freely determine the duration of the employment contract.

However, definite employment contracts are governed by the Act on the Protection, etc, of Fixed-Term and Part-Time Workers (the “Fixed-Term Workers Act”). According to Article 4 of the Fixed-Term Workers Act, employment contracts with a fixed term in excess of two years are considered to be indefinite employment contracts.

Article 17(1) and (2) of the Labor Standards Act provides that employment contracts must explicitly provide for the terms and conditions of employment in writing (which can be in the form of electronic documents). In particular, employment contracts must include provisions on:

• wages (eg, composition of wages, methods for calculating wages and methods for paying wages);
• contractual working hours;
• holidays; and
• annual paid leave. 

Moreover, employers are obliged to deliver these employment contracts to the employees.

Maximum Working Hours

Since 1 July 2021, the weekly maximum working hours of 52 hours have been applied to businesses or workplaces that have five or more employees. Article 50(1) and (2) of the Labor Standards Act provide that working hours may not exceed eight hours per day and 40 hours per week. However, Article 53(1) allows employers to extend the foregoing working hours, as overtime, by up to 12 hours per week upon obtaining the relevant employee’s consent.

For the purposes of determining the working hours, one week refers to seven days including holidays. Thus, the maximum weekly working hours with the permitted extensions are 52 hours (40 hours per week plus up to 12 hours of overtime).

Meanwhile, under limited circumstances where certain criteria are satisfied, the Labor Standards Act recognises the following types of “flexible working systems”.

Flexible Work Hours System (Article 51 of the Labor Standards Act)

In a flexible work hours system, working hours are increased during the weeks where work is concentrated but reduced during other weeks so that, on average, the weekly working hours are within the statutory working hours (ie, 40 hours). Such flexible work hours system can be utilised for a maximum of six-month increments.

Selective Work Hours System (Article 52 of the Labor Standards Act)

In a selective work hours system, an employee may freely choose their working hours over a certain period (not exceeding one month, or, in the case of work pertaining to research and development of new products or new technologies, not exceeding three months), as long as the total working hours do not exceed the statutory working hours for such period. In this system, the employee may decide when they will begin and end work, as well as the number of hours of work in a day.

Presumed Work Hours System (Article 58(1) of the Labor Standards Act)

Presumed work hours systems are used in circumstances where it is difficult to calculate the hours of work performed by an employee because such employee provides labour outside the workplace. In a presumed work hours system, employees are presumed to have worked:

• their contractual hours;
• the hours that are typically needed to perform the relevant work; or
• the hours that have been agreed in writing with the employees’ representative for particular work.

Discretionary Work Hours System (Article 58(3) of the Labor Standards Act)

Discretionary work hours systems apply to limited types of work prescribed under the Enforcement Decree of the Labor Standards Act. These types of work have been legally recognised, based on the nature of the work, to require employees’ discretion in determining how the work should be performed. In a discretionary work hours system, the working hours that have been agreed in writing between the employer and the employees’ representative are recognised as the hours worked by the employees.

Part-Time Contracts

Employees under part-time employment contracts are also considered as “employees” within the meaning of the Labor Standards Act. Hence, the laws do not require part-time employment contracts to have specific terms that are different from ordinary employment contracts. Furthermore, the format used for part-time employment contracts is identical to that of ordinary employment contracts. However, considering the nature of part-time work, a part-time employment contract must clearly indicate the working hours.

Overtime

As described above, statutory working hours under Article 50(1) and (2) of the Labor Standards Act may not exceed eight hours per day and 40 hours per week (excluding break times). However, such statutory working hours may be extended as overtime by up to 12 hours per week in accordance with Article 53(1) of the Labor Standards Act, as long as the employees consent to such overtime.

Article 56 of the Labor Standards Act governs overtime pay. More specifically, at least 50% of the ordinary wage must be paid in addition to the ordinary wage for:

• overtime worked in excess of the statutory working hours (ie, eight hours per day, 40 hours per week);
• work performed during holidays; and
• work performed at night (ie, between 10 pm and 6 am).

Minimum Wage Requirements

By 5 August every year, the minister of employment and labour determines the minimum wage applicable in the following year. The publicly announced minimum wage becomes effective as of 1 January of the following year. Currently, the hourly minimum wage for 2023 is KRW9,620. The hourly minimum wage for 2024 is scheduled to be KRW9,860.

Employers are required to pay at least the minimum wage to their employees, pursuant to Article 6(1) of the Minimum Wage Act. Therefore, in accordance with Article 6(3) of the Minimum Wage Act, employment contracts that stipulate wages below the minimum wage level are invalidated as to such stipulation and, by operation of law, the wages under such employment contracts are presumed to be minimum wages.

13th-Month and Other Bonuses

There is no legal requirement for employers in Korea to pay 13th-month bonuses, etc. Under the Korean labour laws, employers are only obliged to pay monthly wages and severance pay upon an employee’s resignation.

To describe employers’ obligation to provide severance pay in more detail, Article 8(1) of the Act on the Guarantee of Workers’ Retirement Benefits requires employers to set up a system that enables the employers to pay a retiring worker severance pay in the prorated amount equivalent to average wages earned for 30 days for each year of the resigning employee’s continuous service. Therefore, even if severance payments are not covered in employment contracts, or otherwise covered in the employer’s rules of employment, such payments must be provided upon an employee’s resignation.

If an employer is paying “periodic bonuses” as 13th-month bonuses in Korea, such payment is at the employer’s complete discretion, and there are no provisions in the Labor Standards Act that prohibit such bonuses.

Government Intervention

The minimum wage system is a classic example of the government’s interventions in compensation. The government determines the minimum wage on a yearly basis. For 2023, the hourly minimum wage is KRW9,620.

Aside from the minimum wage system, the government may make compensation-related interventions by overseeing whether employers are, among other things, paying statutory severance, as well as the additional wages that must be paid for work performed overtime, during holidays or at night.

Vacations and Vacation Pay

The most typical types of vacation available for employees are:

• weekly holidays;
• public holidays (ie, holidays prescribed under presidential decree); and
• annual paid leave.

Weekly holiday (under Article 55 of the Labor Standards Act and Article 30 of the Enforcement Decree of the Labor Standards Act) refers to a paid vacation given to employees who have “worked continuously” for the contractual working days in a single week. If employees provide such “continuous work” for contractual working days in one week, employers are required to grant, on average, more than one paid vacation per week.

A public holiday prescribed under presidential decree refers to statutory holidays (excluding Sundays) and alternative statutory holidays, which are provided under the Regulation on Holidays of Government Offices. An employer must guarantee such public holidays to its employees on a paid basis. However, an employer may substitute public holidays with other working days by entering into a written agreement with the employee representative (see Article 55(2) of the Labor Standards Act).

Annual paid leave is prescribed under Article 60 of the Labor Standards Act, and it refers to the 15 days of paid vacation granted to employees who have worked for at least 80% of a year. If an employee has provided continuous work for less than a full year or worked less than 80% of a year, then one day of paid vacation is granted as annual paid leave for every month in which an employee provided continuous work.

Required Leave

Leave that is statutorily guaranteed includes maternity leave, paternity leave, fertility-treatment leave, child-care leave, family-care leave, short-term family-care leave, and menstrual leave.

Maternity leave

Maternity leave is covered under Article 74(1) of the Labor Standards Act, and it refers to the leave granted to pregnant women prior to and after childbirth. Statutes on maternity leave are mandatory provisions and, thus, neither the employer’s right to adjust the timing of such leave nor an employee’s forfeiture of the right to take such leave is recognised under the law. Employers must grant a total of 90 continuous days of leave prior to and after childbirth, and at least 45 days out of this 90-day leave must be allocated after childbirth.

Paternity leave

Paternity leave is covered under Article 18-2 of the Equal Employment Opportunity and Work-Family Balance Assistance Act (the “Equal Employment Opportunity Act”). If an employee requests paternity leave due to their spouse’s childbirth, their employer is obliged to grant them ten days’ leave. However, an employee must request paternity leave within 90 days from the date on which their spouse gives birth to the child. Paternity leave granted to an employee is on a paid basis. An employer is prohibited from dismissing, or taking any disadvantageous measures against, an employee on the basis of paternity leave.

Fertility-treatment leave

Fertility-treatment leave is covered under Article 18-3 of the Equal Employment Opportunity Act. If an employee requests fertility-treatment leave in order to receive medical treatment such as artificial insemination or in-vitro fertilisation, their employer is obliged to grant up to three days of leave per year, the first day of which is on a paid basis.

Child-care leave

Child-care leave is covered under Article 19 of the Equal Employment Opportunity Act. If (i) a female employee requests child-care leave to protect her motherhood; or (ii) an employee requests child-care leave in order to tend to their child who is eight years of age or younger or in second grade or lower in elementary school, then an employer must permit child-care leave of up to one year. Furthermore, upon returning from child-care leave, the employer must reinstate the returning employee into the same position or a position at the same wage level as they had prior to taking the child-care leave.

Family-care leave

Family-care leave is covered under Article 22-2 of the Equal Employment Opportunity Act and Article 16-3 of the Enforcement Decree of the same act. An employee may request family-care leave in order to care for their grandparents, parents, spouse, parents-in-law, children, or grandchildren (hereinafter, referred to as “family”) on the grounds of disease, accident or senility. If family-care leave is requested, an employer is obliged to grant up to 90 days of leave per year. Family-care leave may be taken on multiple occasions, provided that each period of leave is at least 30 days long.

Short-term family-care leave

This is also covered under Article 22-2 of the Equal Employment Opportunity Act and Article 16-3 of the Enforcement Decree of the same act. An employee may request short-term family-care leave urgently in order to care for their family on the grounds of disease, accident, or senility, or to urgently care for their children. If family-care leave is requested, an employer is obliged to grant up to ten days of leave per year, which may be taken in increments as short as a single day. The number of days taken as short-term family-care leave is counted towards the ordinary family-care leave.

Menstrual leave

Menstrual leave is covered under Article 73 of the Labor Standards Act. Employers must grant one day of unpaid menstrual leave per month upon request from a female employee.

Confidentiality and Non-disparagement Agreements

There are no provisions under the Korean labour laws that restrict employers from requiring confidentiality and non-disparagement obligations from their employees. Therefore, employers may enter into confidentiality and non-disparagement agreements with employees. An employee’s breach of such agreements would enable their employer to take disciplinary action. Furthermore, if an employer suffers damages from an employee’s breach of confidentiality and non-disparagement agreements, then the employer would be able to seek civil damages.

In addition to contractual agreements on confidentiality, trade secrets, as defined under the Unfair Competition Prevention and Trade Secret Protection Act (the “Trade Secret Act”), are legally protected. According to Article 2 of the Trade Secret Act, trade secrets refer to information (including production methods, sale methods and useful technical or business information for commercial activities) that:

• is not publicly known;
• has been maintained as a secret; and
• has independent economic value.

In other words, for a trade secret to be protected under the law, it must be undisclosed, kept confidential, and useful. Undisclosed trade secrets are those that are not publicly known, and the confidentiality element requires the trade secret to be a secret that deserves legal protection. Lastly, a trade secret is useful if it has independent economic value.

Therefore, as long as a trade secret satisfies all of the three requirements above, then a person (including an employer) may request the court for a prohibition or preventative order against any person (including an employee) who infringes or is likely to infringe trade secrets if the business interest of the employer who possesses the trade secrets suffers damages or is likely to suffer damages due to such infringement (see Article 10(1) of the Trade Secret Act).

Employee Liability

Korean labour laws do not have provisions that restrict or limit an employee’s contractual or tort liabilities. However, the Korean Supreme Court has previously held that where an employer suffers direct damages due to an employee’s tortious act committed while performing their work, then such employer’s right to claim damage compensation from the employee is limited, based on the notion of fair distribution of the damages, to an amount that is deemed appropriate under the principle of good faith. In this regard, employee liability can be deemed to be partially limited.

On a separate note, the obligations of employees are not expressly governed under the Labor Standards Act. Rather, employees’ obligations are stipulated under the employers’ rules of employment. Some of the common obligations of employees include to:

• arrive at work on time;
• not hold concurrent positions;
• keep secrets acquired in connection with work confidential;
• not destroy or remove equipment or facilities from the company;
• not engage in unlawful conduct;
• expend full efforts at work; and
• perform work in a diligent manner in good faith.

Breach of such obligations and responsibilities may subject the relevant employees to disciplinary action.

The Korean Commercial Act imposes a non-compete obligation upon directors, whereas employees are not subject to the same restriction. Nevertheless, employees’ non-compete obligation can be partially recognised through interpretations of court precedents.

The Korean Supreme Court has held that where an employment contract has a non-compete clause, such clause is valid, as long as it is reasonable. However, if a non-compete clause excessively restricts employees’ constitutionally protected rights (eg, freedom in choosing jobs or providing labour) or free competition, then such non-compete clause is invalid for going against Article 103 of the Civil Act.

The Korean Supreme Court further held that, in order to determine whether a non-compete clause is valid, there must be comprehensive consideration of various factors. Among other things, the court considers:

• whether the employer has an interest that necessitates protection;
• the resigning employee’s position and rank;
• the reasons for the employee’s resignation;
• territorial scope, period and the types of jobs restricted through the non-compete clause;
• whether the employee received compensation in exchange for signing the non-compete clause; and
• public interest furthered by the non-compete clause.

Employees

Korean labour laws do not forbid or restrict non-solicitation clauses that prohibit former employees from soliciting other employees who remain employed with the former employer. Therefore, employers may include such non-solicitation provisions within their employment contracts, and require their employees to pay liquidated damages pursuant to Article 398 of the Civil Act for a breach of such an agreement. In addition to liquidated damages, employers may seek civil damages for breach of contract if the employer suffers ascertainable damages from the employee’s breach.

Non-solicitation clauses can also trigger issues regarding trade secret infringements under the Trade Secret Act. The Korean Supreme Court has held that where a person who acquires technological information that qualifies as a trade secret moves to another company and attempts to disclose and use such trade secret at such other company, then such an act constitutes violation of the confidentiality obligation under Article 2.3(D) of the Trade Secret Act. Furthermore, the company that recruits such person is in violation of Article 2.3(A) for unlawfully acquiring a trade secret if such company has failed to exercise due care and supervision in preventing its employees from unlawfully using trade secrets of another company.

Customers

It is difficult to deem a former employee’s solicitation of their former employer’s customers as an infringement of trade secrets within the meaning of the Trade Secret Act.

However, Korean labour laws do not forbid or otherwise restrict an employer from requiring its employees to sign an employment contract that includes a non-solicitation clause that prohibits those employees from soliciting the employer’s customers upon termination of the employment relationship.

In Korea, the Personal Information Protection Act serves as the framework act in relation to data privacy. As such, unless otherwise regulated through separate legislations, data privacy and personal information are governed by the Personal Information Protection Act.

In the past, the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc (the “Info-communications Act”) and the Credit Information Use and Protection Act (the “Credit Information Act”) stipulated provisions that governed an individual’s data privacy and personal information separate from the Personal Information Protection Act. However, as a result of an amendment to the Personal Information Protection Act in 2020, provisions on data privacy and personal information under the Info-communications Act and the Credit Information Act have been consolidated under the Personal Information Protection Act. 

The Personal Information Protection Act now contains special rules that apply to providers of information and communication services. However, despite the foregoing consolidation, the Credit Information Act still has certain provisions that govern data privacy and personal information as they relate to credit information.

Duty to Comply

An employer’s duty to comply with the Personal Information Protection Act begins from the recruiting stage and extends beyond the termination of the employment agreement with its employees. During the foregoing period, the employer must collect and/or use the employee’s personal information in compliance with the Personal Information Protection Act. Employers may independently collect and/or use the employee’s personal information, and, if necessary, employers may also:

• outsource work relating to the processing of collected personal information; or
• provide collected personal information to third parties in accordance with the relevant laws.

Employers are required to store the collected personal information safely, and the collected personal information must be destroyed once it is no longer necessary due to reasons such as:

• fulfilling the purposes for which the personal information was collected; and
• expiration of the storage period of collected information (here, the storage period refers to the period consented to by the employees, or otherwise prescribed under the applicable laws).

The Immigration Act and Foreign Worker Employment Act

Methods of employing foreigners can be largely divided into two categories. The first method is through the “Hiring Foreigners with Professional Skills” system and “Other Status Stay that Permits Employment (mainly those who are not professionals but simple-skilled workers)” under the Immigration Act. The second method consists of the “Employment Permit System” and “Work Permit System” based on the Act on Employment, etc, of Foreign Workers (the “Foreign Worker Employment Act”).

To begin with, the Employment Permit System is a system that allows an employer to employ certain foreigners if that employer cannot hire domestic employees despite its recruiting efforts.

The Work Permit System, on the other hand, allows a foreigner who satisfies certain conditions to obtain a work permit in Korea to be employed with an employer of such foreigner’s choice. This system allows for a relatively broader movement of foreign workers among workplaces in Korea compared to the Employment Permit System. In Korea, the Employment Permit System ordinarily serves as the default system for hiring manual labourers. As for Koreans who hold foreign nationalities, the Work Permit System is applied.

Defining foreign workers

Article 2 of the Foreign Worker Employment Act defines a “foreign worker” as a person who does not have Korean nationality who provides or desires to provide labour in return for wages in any business or workplace situated within Korea. Anyone within the meaning of “foreign worker” must satisfy the requirements and follow the requisite procedures under the Foreign Worker Employment Act in order to be employed in Korea. In addition, any matters not provided under the Foreign Worker Employment Act relating to entering, leaving or staying in Korea must be handled in accordance with the Immigration Act.

Pursuant to Article 18 of the Foreign Worker Employment Act, a foreign worker may pursue employment activities for up to three years from the date they entered Korea. Furthermore, foreigners staying in Korea, as a principle, are subject to the sovereignty of Korea. Additionally, unless a foreigner’s rights under public or private laws are otherwise restricted through treaties or laws, foreigners and Koreans receive identical protection.

Visas

The Foreign Worker Employment Act provides that the Act does not apply to foreigners with any of the following visas who are permitted to stay and work in Korea (ie, visas that allow the visa-holder to pursue employment activities in Korea):

• short-term employees (C-4), professors (E-1), foreign language instructors (E-2), researcher (E-3), technology transfer (E-4), professional employment (E-5), artistic performers (E-6) and designated activities (E-7);
• residence permits for overseas Koreans, such as permanent residence (F-2, F-4, F-5, F-6); and
• working holiday visa (H-1).

According to Article 6(1) of the Foreign Worker Employment Act, a person who intends to hire “ordinary” foreign workers (through the Employment Permit System) must first post a job opening for a domestic worker through an employment security office defined under the Employment Security Act.

If, despite these efforts to hire a domestic employee, an employer fails to hire new personnel, then, as prescribed under Article 8(1) of the Foreign Worker Employment Act, the employer must apply for an employment permit for foreign workers from the head of the employment security office, in accordance with the requirements under the enforcement decrees of the Ministry of Employment and Labor.

If an employer satisfies the conditions for employing foreigners, then the employer may apply for the issuance of an employment permit from an employment assistance centre. Upon receipt of such application, the employment assistance centre makes worker referrals (in multiples of three). The employer can then select the personnel qualified for the job among the referred workers and obtain an employment permit for such worker (see Article 8 of the Foreign Worker Employment Act).

Simultaneously upon issuance of the employment permit, a standard employment contract is drafted based on the working conditions described in the employer’s application for the employment permit.

Once the said employment contract is executed, a visa issuance certificate is issued. Thereafter, upon the selected foreign worker’s arrival in Korea and completion of employment training, they are dispatched to the relevant workplace.

Mobile work has recently been receiving heightened attention from many companies. Mobile work in Korea generally refers to performing one’s tasks via smartphones, tablet computers, laptops, and other mobile devices. Korean labour laws do not have provisions that govern mobile work, and, hence, companies may freely implement mobile work in accordance with their needs.

Advantages

From the employees’ perspective, the benefits of mobile work include the ability to perform their work without restraints in time and location. Moreover, the freedom in choosing where to work may lead to enhanced work efficacy and work satisfaction. Employers may also enjoy the benefits of mobile work through reduced costs for maintaining office spaces and increased performance arising from higher work efficacy.

Disadvantages

There are, however, downsides to mobile work. Employees often use mobile devices for both personal and work purposes, which increases vulnerability in information security compared to working from an office that is physically protected by various security facilities and measures. Furthermore, given that employees performing mobile work generally work alone, the employees may be more susceptible to feeling social isolation or experiencing attention deficit, among other things. In addition, if an employee is injured while working at a location other than the office, there may be difficulties in determining whether such injury was caused by an industrial accident covered under the Industrial Accident Compensation Insurance Act.

Steps Employers Can Take

Therefore, companies that intend to implement mobile work are advised to address the disadvantages by taking precautionary measures such as:

• establishing the necessary information security system;
• devising means to strengthen the bond among employees; and
• creating manuals to prevent occupational injuries or accidents.

“Sabbatical” in Korean generally refers to sending a long-tenure employee on paid leave for a certain period as a reward for, and in recognition of, the employee’s continued services. Sabbatical leave is not governed under Korean law. However, since Korean labour laws stipulate only the statutory minimum protections for employees, companies have full discretion to provide sabbatical leave to their employees in addition to their statutory required leave (eg, annual paid leave).

As noted above, sabbatical leave is generally granted to long-tenure employees. However, sabbatical leave is not a common type of leave observed in Korea, and most companies in Korea do not provide sabbatical leave to their employees. 

However, a company may wish to provide sabbatical leave to its employees to attract talented employees, promote long-term employment, and accommodate and compensate long-tenure employees. In such a case, the company should consider stipulating provisions within its rules of employment to govern sabbatical leave (eg, eligibility for sabbatical leave, sabbatical leave duration, procedures to apply for sabbatical leave, etc) before implementing said leave.

“Smart Work”

Companies have recently begun actively implementing a new method of performing work called “smart work” in response to the outbreak of COVID-19, the emergence of new technologies, and the trend in valuing work efficacy. Smart work is a concept that encompasses less traditional working environments, such as working from home, hot desking, and working from base offices (ie, work spaces maintained outside the headquarters of a company in locations that are more accessible to employees).

For example, companies have begun allowing employees to work from home on a regular basis to induce enhancements in productivity and performance while reducing the costs of maintaining office spaces. Some companies have also adopted hot desking, which enables employees to select their preferred work spaces (eg, window-side, open desk, partitioned desks, etc) to increase work efficacy. Other companies have opened up new office spaces in remote locations that are more accessible to, or preferred by, their employees to reduce their commuting burden.

Overall, companies are experimenting with various types of smart work to explore new working methods and environments that are mutually beneficial to the company and its employees. This trend is anticipated to continue, in light of the developments in technology, the acknowledgement of benefits associated with non-traditional working arrangements, and changes in the values sought by employees.

Article 2.4 of the Trade Union and Labor Relations Adjustment Act (the “Trade Union Act”) defines a trade union (ie, a labour union) as “an organisation or associated organisations of employees, which is [or are] formed voluntarily and collectively upon the employees’ initiative for the purpose of maintaining and improving their working conditions and enhancing their economic and social status”. However, such organisation or associated organisations of employees is/are not considered as a trade union if:

• an employer or other person who always acts in the interest of the employer is allowed to join;
• most of the union’s expenditure is funded by the employer;
• its activities are only aimed at mutual benefits, moral culture and other welfare undertakings (as opposed to enhancing employees’ working conditions);
• those who are not employees are allowed to join the union; or
• the main purpose of the union is to engage in political activities.

The most important function and role of a trade union is engaging in “collective bargaining” with the employer and thereby executing a “collective agreement” in order to foster enhancement and preservation of employees’ working conditions (see Articles 29 and 31 of the Trade Union Act).

In addition, trade unions may engage in “collective actions” in order to carry through their position in a dispute with the management arising from disagreements concerning working conditions (see Articles 2.5 and 2.6 of the Trade Union Act).

Article 29 of the Trade Union Act confers on the representative of a trade union the authority to bargain and enter into a collective agreement with the employer on behalf of the trade union and its members. Hence, any by-laws or internal regulations applicable to trade unions that limit the foregoing authority of a trade union representative are deemed invalid.

Neither the Trade Union Act nor any other relevant laws provide methods for appointing or electing a representative of a trade union. Therefore, the methods and procedures for appointing or electing a trade union representative are determined through by-laws or internal regulation of the trade unions, and the trade union representative should be appointed or elected accordingly.

As a result of the implementation of the 6 July 2021 amendment to the Trade Union and Labor Relations Adjustment Act, dismissed employees and job-seekers may join a company’s union. However, union members who are not current employees of the company are subject to certain limitations in their union activities. For example, non-employee union members may only engage in union activities to the extent that such activities do not hinder efficient operation of the company’s business, and they may not serve as an officer of the union. Furthermore, the number of non-employee union members is not counted for the purposes of:

• determining the limits of working hours’ exemption;
• selection of the representative union for collective bargaining; and
• voting for or against taking industrial action.

“Collective agreement” refers to a written agreement that details the terms of working conditions (eg, the wages and working hours) of the trade union members that have been negotiated through the collective bargaining process. Collective agreements are signed and executed by and between the trade union and the employer.

Collective agreements not only define the contractual obligations of the parties, but also have a normative effect in regulating the employment contract between the employer and individual employee. For example, Article 33 of the Trade Union Act invalidates portions of the employment contract or the employer’s rules of employment that fall foul of the standards for working conditions stipulated in the collective agreement. In other words, a collective agreement that has been entered into on an equal footing between the workers and the management takes precedence over individual employment contracts or rules of employment set by the employer.

Collective agreements also entail a “peace obligation” which, during the effective period (maximum of three years) of the collective agreement, requires the parties to mutually comply with the provisions within the collective agreement and prohibits the trade union from taking collective action for the purposes of modifying the terms of the collective agreement that have already been agreed between the parties.

Ordinarily, contracts are binding only upon the parties to such contracts. For collective agreements, however, the binding effect of the agreement may also extend to third parties (ie, non-parties to the agreement) if “certain conditions are satisfied” (see Articles 35 and 36 of the Trade Union Act).

In Korea, termination of employment can occur in the following ways:

• occurrence of grounds for automatic termination (eg, employee reaching retirement age, death of the employee or expiry of the contract period);
• the employer’s unilateral dismissal of the employee; and
• termination through mutual agreement between the employer and employee.

There is no difference in procedures depending on the grounds for dismissal and, hence, the general requirements for dismissal are identical regardless of the grounds on which an employee is dismissed. In particular, Article 26 of the Labor Standards Act prescribes that an employer must give an employee prior notice of at least 30 days if the employer intends to dismiss such employee. If this notice requirement is not satisfied, the employer must pay the employee an additional sum of money equivalent to at least 30 days’ worth of the employee’s ordinary wages. The foregoing requirement applies even in circumstances where employees are dismissed due to managerial reasons.

In addition to the prior notice requirement, in order to dismiss an employee, the employer must provide the employee with “written” notice in accordance with Article 27 of the Labor Standards Act. Furthermore, the written notice must describe the reason for dismissing the employee as well as when the employee is to be dismissed.

Automatic Termination

No “motivation” is required for automatic termination where employment is terminated irrespective of the employer or employee’s intent. However, if employment is terminated due to expiry of the contract period, and if the employee concerned had a legitimate expectation for renewal of their employment contract, then it may be difficult for the employer to terminate the employment relationship unilaterally against the relevant employee’s will, without a justifiable cause.

Unilateral Dismissal

Article 23(1) of the Labor Standards Act requires employers to have a justifiable cause when dismissing, laying off, suspending or transferring an employee, reducing an employee’s wages, or taking other disciplinary actions. As such, employers may only terminate employees against their will if the employer has a “justifiable cause”. The Korean Supreme Court has defined that there is a justifiable cause if, due to a fault attributable to the employee, it is impossible for the employer and the employee to continue their employment relationship under generally accepted social norms.

Mutual Termination

This refers to termination of employment upon the employer’s and employee’s mutual agreement. Mutual terminations can further be narrowed down to, among others, cases where employees voluntarily resign by submitting a letter of resignation, or employees accept the employer’s suggestion to resign, in which case, the employment relationship is terminated upon the parties’ execution of a separation agreement.

Collective Redundancies

Article 24 of the Labor Standards Act governs dismissals based on managerial reasons, and this includes mass lay-offs (ie, collective redundancies). In order for an employer to dismiss its employees for managerial reasons, all of the following requirements must be met:

• there must be an urgent managerial need;
• the employer must make every effort to avoid the dismissals;
• the employer must select employees to be dismissed based on reasonable and fair standards; and
• the employer must notify the employee representative of the dismissal no later than 50 days prior to the dismissal, and engage in good-faith discussions with said employee representative.

These requirements have been further explained by the Supreme Courts, as noted below.

Urgent managerial need

An urgent managerial need is not limited to circumstances where a lay-off is required for the company to avoid bankruptcy. If there is a reasonable and objective need for a reduction in the workforce in order to prepare for a potential future risk, then such need qualifies as an urgent managerial need.

Efforts to avoid dismissal

“Making every effort to avoid dismissals” refers to taking all possible measures to minimise the number of dismissals by, among other things, streamlining work methods or managerial policies, freezing new hires, utilising temporary suspensions, suggesting voluntary resignations (by offering additional compensation, etc) and transferring employees. The measures to be taken and their degree are neither fixed nor conclusively defined and, thus, whether adequate measures were taken depends on multiple factors, including the managerial risks faced by the relevant employer, managerial reasons as to why lay-offs should be made, the type and scale of the business, and the number of employees at various levels.

Reasonable and fair standards

The definition of “reasonable and fair standards” is also fluid. It considers various factors to determine what is “reasonable and fair”, such as the magnitude of the managerial risks faced by the relevant employer, the managerial reasons that necessitate lay-offs, the type of business performed by the relevant division and the composition of its employees, social and economic conditions during the period when lay-offs are deemed necessary, etc. Furthermore, when determining the standards for selecting the employees to be laid off, the employer’s circumstances relating to its managerial interests can be considered concurrently with the employees’ interests, as long as the employer’s interest is objectively reasonable.

Notice period

The last requirement of 50 days’ prior notice and a good-faith discussion does not affect the validity of a lay-off even if it is not satisfied. Therefore, if there has been sufficient time (albeit, not 50 days) to notify the employees and engage in good-faith discussions, the lay-off is valid, as long as all other requirements have been satisfied.

Notice Periods

As noted, employers must, pursuant to Article 26 of the Labor Standards Act, give an employee prior notice of at least 30 days if the employer intends to dismiss such employee. This notice requirement applies also to dismissals due to managerial reasons. In addition, as with the procedures for taking disciplinary actions, employers are required to provide prior notice (usually one week before the meeting) that an HR committee meeting will be held.

Other than the above, the Labor Standards Act does not provide a mandatory notice period. However, if the employer provides a separate notice period in its rules of employment that are not required by law, then such procedures must be complied with.

Severance

If an employer fails to give the requisite prior notice of 30 days before dismissing an employee, then the employer must pay the employee an additional sum of money equivalent to at least 30 days’ worth of the employee’s ordinary wages pursuant to Article 26 of the Labor Standards Act.

Also, aside from the requirements to provide prior notice and to pay an additional allowance for failing to provide prior notice, there are additional severance pay-related requirements under the Act on the Guarantee of Workers’ Retirement Benefits (the “Retirement Benefits Act”). The Retirement Benefits Act requires employers to provide severance payments or retirement pensions to resigning employees who have been employed for at least one year. To provide the foregoing payments or pensions, an employer is required to operate a retirement-benefit scheme in accordance with the Retirement Benefits Act.

Article 23(1) of the Labor Standards Act requires an employer to have justifiable cause when dismissing an employee. The Korean Supreme Court has defined that there is a justifiable cause if, due to a fault attributable to the employee, it is impossible for the employer and the employee to continue their employment relationship, under generally accepted social norms. Whether continuance of the employment relationship is impossible under generally accepted social norms is determined on comprehensive consideration of various factors, including:

• the purpose and nature of the employer’s business;
• workplace conditions;
• the employee’s position and responsibilities;
• how and why the employee engaged in misconduct;
• the impact such misconduct will have on the sound order of the business; and
• the employee’s past behaviour.

Common Grounds for Dismissal

Ordinarily, grounds for dismissal are stipulated under a company’s rules of employment and other relevant internal regulations. Some of the most common grounds for dismissal recognised through court precedents are:

• misrepresentation or concealment of educational background and work experience;
• fabricating CVs;
• bad behaviour at work, such as unexcused absences;
• refusing to follow orders relating to personnel movements (eg, transfers);
• assaulting colleagues or supervisors;
• inflicting harm on the company through criminal conduct (eg, embezzlement, breach of duty); and
• personal misconduct committed outside the workplace.

Valid Dismissals

Pursuant to the Labor Standards Act, an employer must provide 30 days’ notice prior to the employee’s dismissal (Article 26) and notify the detailed reason for, and timing of, the dismissal in writing (Article 27).

Furthermore, if an employer has collective agreements, rules of employment, employment contracts or other relevant agreements that separately provide additional procedures for taking disciplinary actions, then the employer must comply with such procedures. The Korean Supreme Court has also held that disciplinary dismissals are invalid if an employer fails to follow the procedures laid out in its collective agreements, rules of employment, employment contracts or other relevant agreements when dismissing an employee.

An employer’s dismissal of an employee is valid if the employer can justify:

• its reason(s) for taking the disciplinary action;
• the procedures followed for taking the disciplinary action; and
• the level and/or adequacy of the disciplinary action taken.

However, the Korean Supreme Court has held that if any of the foregoing factors cannot be justified, then the resulting disciplinary dismissal is invalid.

An employer and employee may terminate their employment relationship upon mutual agreement. There are no specific requirements as to the methods of, or procedures/formalities for, mutually agreeing to terminate the employment relationship, as long as the termination is based on the employer’s and employee’s free will. Ordinarily, however, an employee voluntarily submits a letter of resignation to the employer and the employer accepts such letter of resignation by the employee to terminate the employment contract.

The Labor Standards Act does not govern voluntary terminations of employment based on the free will of both the employer and employee. Although the Labor Standards Act does not have any restrictions on employers and employees terminating their relationship through a mutual agreement, the Korean Supreme Court deems termination agreements to be invalid if such mutual agreement was not a product of the employee’s genuine intent.

Article 23(2) of the Labor Standards Act protects employees from dismissal when an employee is on leave for medical treatment of an occupational injury or disease and within the 30 days immediately following that employee’s return to work; and when an employee is on maternity leave and within the 30 days immediately following that employee’s return to work. However, the foregoing protections do not apply if the employer has paid lump-sum compensation to the relevant employee in accordance with Article 84 of the Labor Standards Act, or if the employer is no longer able to continue its business.

The Labor Standards Act does not have provisions relating to dismissals, etc, of an employee representative. However, if the collective agreement (or other similar agreement) requires the employer to obtain the trade union’s consent to dismiss an employee representative or a union member, then the employer must comply with such requirement. Otherwise, the employer’s actions against the relevant employees are deemed invalid pursuant to Korean Supreme Court precedents.

An employee may make a wrongful dismissal claim by (i) filing a civil suit for invalidation of the dismissal and disputing whether the dismissal was justified; and (ii) petitioning for wrongful dismissal relief from the local Labor Relations Commission (the “Local Commission”). The civil suit for invalidation of dismissal and petition for wrongful dismissal relief are two independent systems. Therefore, an employee may choose to proceed with either or both of the systems.

Civil Suit

When an employee proceeds with the first of the two options above and subjects the dismissal to a dispute, then the court of first instance must decide as to the validity of the dismissal. Both the employer and employee may challenge the court of first instance’s decision by filing an appeal within two weeks from the date the written court decision was served to the relevant party. If either of the parties wishes to challenge the decision rendered by a High Court or a panel of district court judges acting as a court of second instance, then the parties must file an appeal to the Supreme Court within two weeks from the date the written decision was served, for a final and conclusive judgment.

Petition for Relief

If an employee proceeds with the second option, then the petition for relief must be filed with the Local Commission within three months from the date the employee was dismissed. Once the petition for relief is filed, the Local Commission determines whether the employer was justified in dismissing the employee. Article 31 of the Labor Standards Act provides that both the employer and employee may challenge the Local Commission’s decision by requesting a new examination to the National Labor Relations Commission (the “National Commission”) in accordance with the Labor Relations Commission Act within ten days of being notified of the Local Commission’s decision.

If either of the parties wishes to challenge the National Commission’s decision to a re-examination, then the relevant party must file an administrative lawsuit in accordance with the Administrative Litigation Act within 15 days of being served with the National Commission’s decision. The administrative lawsuit can be appealed twice, much like the first option (ie, a civil lawsuit) described above.

In the past, where the petitioning employee could not be reinstated to their original position due to expiry of the contract period or reaching retirement age, the Labor Relations Commission dismissed the employee’s petition without reviewing the claim because the petition did not satisfy the criteria for a review. However, the Labor Standards Act, which came into force on 19 November 2021, prescribes in Article 30(4) that the “Labor Relations Commission shall issue a remedial order or dismissal decision (ie, dismissing the case on merits after reviewing the claim) in accordance with paragraph (1) even if the employee cannot be reinstated to [their] original position (or for cases other than dismissal, reinstated to [their] original condition) due to expiration of contract period, reaching retirement age, etc. In such a case, if the Labor Relations Commission determines that the dismissal was unlawful, it may order the employer to pay the employee an amount equivalent to the wages the employee would have received had the employee continued to provide services during the period they were dismissed (or for cases other than dismissal, an amount equivalent to reinstate the employee to [their] original condition).” Therefore, the Labor Relations Commission must review the petition filed by an employee irrespective of whether the employee can or cannot be reinstated to their original position (or original condition if the employee was not dismissed) and either render:

• a remedial order (if the employee’s petition is supported by justifiable cause); or
• a dismissal decision (if the employee’s petition is not supported by justifiable cause).

Korean labour laws that prohibit employers from discriminating against employees include the:

• Labor Standards Act;
• Equal Employment Opportunity Act;
• Fixed-Term Workers Act;
• Act on the Protection, etc, of Temporary Agency Workers (the “Temporary Agency Workers Act”); and
• Act on the Prohibition of Age Discrimination in Employment and Elderly Employment Promotion (the “Age Discrimination Act”).

The foregoing legislation protects employees from various types of discrimination identified in the respective acts’ legislative intent and purpose as described below.

• Labor Standards Act: Article 6 prohibits employers from discriminating against employees based on gender. Furthermore, employers are prohibited from discriminating in relation to employees’ working conditions based on nationality, religion or social status.
• Equal Employment Opportunity Act: Article 7(1) prohibits employers from discriminating on the basis of gender when recruiting or hiring employees. Also, Article 8(1) prohibits wage discrimination by requiring employers to provide equal pay for equal work performed within the same business.
• Fixed-Term Workers Act: Article 8(1) prohibits employers from discriminating between employees under definite employment contracts and employees under indefinite employment contracts who work in the same business or workplace, or in the same or similar positions.
• Temporary Agency Workers Act: Article 21(1) prohibits employers of agency employees (ie, dispatch agencies) and users of dispatched agency employees (ie, companies that use dispatched agency employees; the “user company”) from discriminating between such dispatched employees and other employees of the user company who perform the same or similar work.
• Age Discrimination Act: Article 4-4(1) prohibits employers from discriminating against employees on the basis of age, without justifiable grounds, as to the following –
1. recruitment and employment;
2. wage, provision of money and valuables other than salary, and other welfare benefits;
3. education and training;
4. job placement, transfer or promotion; and
5. retirement and dismissal.

Burden of Proof

Ordinarily, the party raising a legal claim bears the burden of proof in substantiating their claim. However, the Korean labour laws determine whether laws have been violated based on substantive, as opposed to formalistic, standards when the employment relationship between an employer and an employee is at issue. In particular, Article 30 of the Equal Employment Opportunity Act expressly provides that the burden of proof is shifted to employers when resolving disputes arising out of this Act.

Relief and Damages

Article 9(1) of the Fixed-Term Workers Act and Article 21(1)2 of the Temporary Agency Workers Act enable fixed-term employees, part-time employees and dispatched employees who have been discriminated against, to file a petition to the Local Commission for a corrective order against the discrimination such employees were subject to. Furthermore, as of 19 May 2022, employees have been enabled to seek relief from the Labor Relations Commission for discrimination prohibited under the Equal Employment Opportunity Act. Although the Labor Standards Act and Age Discrimination Act do not expressly provide the opportunity to seek relief from the Local or National Commission, remedies for violations of these Acts, including unlawful discrimination, can be obtained through filing:

• petitions with the Ministry of Employment and Labor;
• civil lawsuits with the court; or
• criminal complaints with the investigative authorities.

Separate from the above, an employee may also seek compensation for any pecuniary damages and/or emotional distress they have suffered due to the employer’s discrimination without reasonable cause.

Increased Use of Virtual Hearings Through Amendment of the Civil Procedures Act and Criminal Procedures Act

The amendments to the Civil Procedures Act and the Criminal Procedures Act which came into effect on 18 November 2021, opened up the grounds for expansion in the use of virtual hearings. According to the National Court Administration of the Korean Supreme Court, over 10,000 hearings had been conducted virtually by April 2023, and the use of virtual hearings is on the rise.

Civil litigations

For civil litigations, virtual hearings may be held (i) if the presiding judge deems it appropriate; or (ii) at the request of, or consent by, the parties if the court deems it difficult for a party to appear before the court in person due to a traffic inconvenience or any other reason. Virtual hearings may be held not only for the pleading, but also for preparatory pleading and examination hearings.

Criminal litigations

For criminal litigations, the appearance of the party is an absolute requirement, and hence, trials may not be held virtually. However, preparatory hearing and witness examinations may be conducted virtually if the court deems this reasonable after hearing the opinions of the prosecutor and the defence counsel.

Benefits of virtual hearings

The procedures for conducting virtual hearings do not substantially differ from those for conducting the hearing in person other than the fact that the parties attend virtual hearings through the use of audio-visual devices connected to the internet. One of the main benefits of virtual hearings is that the parties or their representatives are relieved of travelling burdens or difficulties.

Problems with virtual hearings

Some of the concerns of virtual hearings include not being able to fully present one’s case if there are connection issues that cause difficulties in presenting arguments or sharing exhibits. Moreover, there is a risk of a third party intervening in the hearing by providing advice or intimidating the party out of view of the camera.

Implementation of the Online Labor Relations Commission

The Labor Relations Commission currently does not utilise electronic systems to conduct hearings or other procedures. Therefore, as a principle, all documents (eg, complaints, answers, exhibits, etc) must be delivered via postal or courier services, and parties must attend examinations and hearings in person.

Recently, however, the National Labor Relations Commission announced its plans to create an online system called the “e-Labor Relations Commission” through which parties will be able to (i) file petitions and check the status of cases online; and (ii) virtually attend examinations and hearings. The e-Labor Relations Commission system will be used by one of 12 Regional Labor Relations Commissions as a test run in 2023, with the goal of implementing it in all 12 Regional Labor Relations Commissions in 2024.

Once the e-Labor Relations Commission system is fully operational, it is anticipated that the parties will experience increased convenience in all aspects of the dispute resolution procedure, including filing petitions, submitting documents and attending hearings.

Class actions in Korea are different from class actions in common-law jurisdictions, where they are initiated by a few plaintiffs who represent a class of individuals, and damages are awarded even to the individuals within the class who did not participate in the class action, provided that such individuals were not otherwise excluded.

By contrast, in Korea, class actions take the form of a “multi-party litigation” in accordance with the Civil Procedures Act, and multiple plaintiffs file a lawsuit as a single “group”. In other words, in Korean “class actions”, only the individuals who are named as a party to the litigation are compensated or redressed.

With certain exceptions under Article 87 of the Civil Procedures Act, only lawyers may represent employees before the court.

Employment and other related disputes between employers and employees may be resolved privately through arbitrations, mediations and settlements. Moreover, such disputes may also be resolved through arbitrations, mediations and settlements administered before the court and the Local Commissions.

Under the principle of private autonomy (ie, freedom of contract), pre-dispute arbitration agreements regarding disputes relating to working conditions, etc, are effective, in principle, if they are included in the employment contracts. At the same time, labour laws, including the Labor Standards Act, are considered as mandatory provisions that cannot be avoided via contracts. Therefore, any agreement that excludes such labour law provisions or is less favourable to employees, compared with labour law provisions, is invalid.

Article 98 of the Civil Procedures Act imposes the cost of the lawsuit upon the losing party. As such, the losing party, in principle, is responsible for the litigation fees. Conversely, attorneys’ fees are divided between the parties in accordance with Article 3 of the Rules on Calculation of the Attorney’s Fees.